Decree-Law no. 62/2020, of August 28th was published today, establishing the organization and functioning of the National Gas System and its legal framework and also transposing Directive 2019/692 of the European Parliament and Council of July 13, 2019, amending Directive 2009/73/EC, which establishes common rules for the internal market in natural gas.
As assumed by this Government, the progressive decarbonization of the gas sector is seen as an extremely important instrument to guarantee the desired energy transition and carbon neutrality. It shall also be noted that as natural gas is expected to continue to play an important role in the “energy mix” in Portugal, particularly regarding electricity production. The progressive decarbonization of this sector is also, for this reason, of outmost importance in view of the objectives of this Government.
It is thus foreseen that the decarbonization of the gas sector will be achieved by guaranteeing, at each moment, the incorporation of gases of renewable origin and low carbon gases in the National Natural Gas System. Biomethane and hydrogen, generated from renewable energy sources, incorporated into the circulating fuel in the public gas network will also prevent the idleness of the concession networks, allowing their continued use.
One of the main new aspects included in this legislation is the creation of a new activity in the value chain of the National Gas System, being this the production of gases of renewable origin or low carbon gases, which Portugal now has. This Decree-Law will also guarantee that the production of this type of gases will be a liberalized activity with low administrative requirements of eligibility, being the producer able to allocate the product for any purpose, particularly self-consumption, injection in public gas networks, bulk supply to any consumer, either for industrial or private purposes (similar to natural gas, hydrogen can be a movement liquefied form), export or used into other sectors, such as transport.
On the other hand, following the approval of the National Strategy for Hydrogen (EN-H2) by Council of Ministers and in line with the clear commitment that the Government intends to make on hydrogen and biomethane as a fundamental instrument to achieve carbon neutrality by 2050, this legal framework creates the conditions for the material incorporation of gases of renewable origin or low carbon content within the National Gas System. In light of the relevant modifications and reorganization that introduces in the sector, its publication led to the revocation of Decree-Law no. 30/2006, of February 15th and of Decree-Law no. 140/2006, of July 26th, in their as amended, (whose principles related to the organization and functioning of the National Natural System are now gathered in a single legal instrument).
It shall also be noted that with the entry into force of this decree-law (on the day after its publication) the consumers will be obliged to consume a certain share of gases of renewable origin or low carbon gases and the supplier of last resort will be entrusted with the role of facilitator between production and commercialization, ensuring the acquisition of this type of gases that shall be requested by other market agents to meet the minimum incorporation share. This purchase for later resale is foreseen in the preamble of the decree-law and may be levered into a subsidization mechanism subject to competition, which allows the price of these gases to be similar or equal to the ones of natural gas, with the differential being financed in order to avoid burdens to the consumer.
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